Outsourcing is an executive tool that can reduce/contain costs, mitigate risk, eliminate areas of capital expenditure, move fixed costs to variable costs and reduce headcount.
Outsourcing has become one of those concepts that has changed perceptions over time. It has been around in one form or another for many years, but the staggering growth of the market has refocused attention on the reasons, benefits and pitfalls of these increasingly important decisions. Many large organisations have embarked on huge cost-cutting exercises over the last few years. The glaring exception in many cases has been IT, which in some cases has risen by as much as 20% per year. The argument may be that effective application of IT has resulted in some of these savings, although that needs to be proven or justified in each case.